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Changes coming for the Law on Tips?

Changes coming for the Law on Tips?

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2 October 2018 Latest

The Law on Tips

Can we expect legislation for how restaurant’s deal with tips left for waiting staff?

Teresa May has told conference that there will be a change in the law on tipping in restaurants – Jeremy Corbyn says it was his idea, so finally something that both main parties agree on.

There has been a fair bit of press over the last couple of years about how tips are accounted for and who gets them – does a tip go to the waiter or to the restaurant. Most of us probably expect that the tip goes straight to the waiters, but quite often this is not the case and some of the money goes to the restaurant either as an admin charge or for some other reason.

All of tip money to go to staff

There are several ways that tips can be split among the staff, but the new proposal from the PM is that all of the money provided as tips must go to the staff and nothing is to be held back for the restaurant. It has been illegal for some time to use tips to make up salaries to the National Living or Minimum Wage, but that has not stopped some businesses from taking a cut. Announcements at conference may not always find their way into legislation, but this is something that will be popular and something that the parties agree on, so there is every likelihood that we will see action on this in the future.

Current Law on Tips

It might be considered as interesting that HMRC considers tips to be income and, as such, taxable, but they are not considered income for the purposes of the National Living or minimum Wage, so tips, gratuities, service charges and cover charges do not count towards minimum wage pay. This is regardless of whether they are paid through your payroll or are given direct to workers by customers or a tronc master.

It will be interesting to see how any legislation is framed and how this sits with any arrangements that your business may have currently, we will, of course, let you know as soon as any Bill is put forward.

There is a fairly interesting note about the changes to the law on tips on the BBC New website, which you can see by clicking here

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